Exclusive: Atlas Venture raises ninth fund

FORTUNE — The first time I ever spoke with venture capitalist Jeff Fagnan was January 2009. I had heard that his firm, Atlas Venture, was cutting back on staff after finishing up fundraising more than $100 million below its $400 million target (and an even farther cry from the $750 million it had raised in the dotcom heyday). Not too enjoyable of a conversation. Neither was a follow-up about how Atlas basically would begin to wind down its London office, which meant additional layoffs.

At the time, Fagnan sounded hopeful that Atlas could turn things around by slimming down and refocusing. I was highly skeptical because, well, few VC firms survive a steep fall from grace. Remember, Atlas once had more than a dozen partners and offices all over Europe and North America. Now it was just a small handful of folks in Boston – with a lot less cash and very questionable future prospects.

But it seems I was wrong. The firm has just closed on its ninth fund with $265 million in capital commitments, which is $15 million above what it had been calling its hard cap. And there was plenty of over-subscription beyond that.

So Fagnan seemed to be in much better spirits yesterday when we had lunch to discuss the news. He explained that the big change was refocusing almost all of the firm’s new deal activity around Boston (save for a few opportunistic Valley plays), with a focus on providing lots of seed capital (<$1m) before agreeing to lead Series A’s.

“You can actually get lots of data now with relatively little money,” Fagnan explains, adding that he views ‘signaling risk’ concerns as overblown. “Seeds also let us get checks to the entrepreneurs faster, and the entrepreneur knows we have pockets deep enough to do the Series A if things are progressing in the right direction.”

He adds that this strategy is working not only for IT, but also for life sciences (where Atlas investments mostly in biotherapeutics – often partnering early with big pharma on development/option deals).

“I think they’re going to dominate the Boston seed market, maybe alongside Google Ventures, because they spend their time in Boston instead of in New York” says an Atlas limited partner. “I cannot think of another firm that’s gone through such a transformation and came out on the other side.”

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